Power & Energy

Current energy mix for power generation in Pakistan is heavily dependent on thermal power generation (approximately 70% of generation mix) and the focus is to encourage investments in indigenous resources to generate cheap electricity such as coal, nuclear, hydropower, solar and wind energy generation.

Total Installed Capacity – 22,797 MW

IPP Share – 9802 MW (43%)

Active Installed Capacity – 19,522 MW

Annual Power Generation 2012 – 12,277 MW

The potential of hydro power in Pakistan is huge nearly 40,000 MW in possible capacity whereas only 16.25% is being utilized so far. The remaining untapped potential, if properly exploited, can effectively meet Pakistan’s ever-increasing demand for electricity in a cost-effective way. Hydro plants have no fuel costs, but incur higher construction costs and lower utilization. Hence, project returns are at best in line with thermal plants, albeit with higher margins. Pakistan has lots of room to grow this clean power.

The Hydel energy is a big source mainly originating from NWFP, due to its geographical location it has a number of major hydroelectric power projects. In order to utilize this resource beneficially, SHYDO carried out considerable work on different hydel schemes and has identified hydel potential of more than 6000 MW. SHYDO identified locations in the mountainous areas of NWFP i.e. Districts of Chitral, Dir, Kohistan, Mansehra and Swat.

Future Prospects
Vision 2030 projects to increase hydel power potential from the existing capacity of 6,499 MW to 32,660 MW to 40,000 MW. However, during the past 8 years or so no major hydro power project could be completed other than Ghazi Barotha. Despite all preliminary spade works and feasibility studies a major dam cum hydro power project like Kalabagh Dam could not be brought out of the hook, due to lack of consensus and disagreement. Now the Federal Minister of Water and Power, Raja Pervez Ashraf, has openly discarded the project and Sindh and NWFP governments has celebrated this decision without realizing the fact that this project is more beneficial to them than Punjab. Similar issues are more or less associated with other major dams in the northern areas. WAPDA has undertaken feasibility studies/ construction work for a number of hydro/thermal power projects under the Vision 2025 Program. Work on Allai Khawr (21 MW), Khan Khawar (72 MW) and Dubair Khawar (130 MW) hydropower projects is in full swing. Implementation of Neelum-Jhelum (969 MW) hydropower project has just started and is in early stage of project development. Feasibility studies of a number of the hydropower projects are also underway including Bunji (5,400 MW) and Kohala (600 MW). After the completion of the planned projects the installed capacity is expected to increase to 42,000 MW.

PPIB has issued number of LOI to Independent Power Producer (IPP) for the development and operation of hydro power plant. Once the first project reaches financial closure, many more will pave the way for influx of further investment, domestic as well as foreign, in power projects based on renewable resources. PPIB has also declared seven raw sites for private sector on which private investors are either preparing feasibility studies or have approached NEPRA for tariff determination.

The flow of River Indus and its tributaries constitute the main source of surface water for the country. According to the Indus Water Treaty, the flow of three eastern rivers namely Beas, Sutlej and Ravi was conceded to India, while Pakistan is mostly dependent on three western rivers… Indus (including Kabul), Jhelum and Chenab. The decision though more favorable to India was agreed by General Ayub Khan. The completion by India of Wuller, Bagliar and Krishanganga, Uri-11Pakal Dul and Burser projects on western rivers of Indus, Jhelum and Chenab to which Pakistan has the exclusive right according to the 1960 Indus Basin Treaty, will create serious water shortage. It will also enable India to divert water of western rivers as it already did once and created problems for Pakistan. Moreover, India can release water from eastern rivers during high floods, thus damaging crops in adjoining the areas along the eastern rivers in Pakistan’s Punjab.

Besides having potential of construction of huge dams, Pakistan can also utilize its resources for the construction of ‘Run-of-river’ hydropower plants in NWFP and AJK. Hydropower has traditionally been considered environmentally friendly because it represents a clean and renewable energy source. At hydroelectric projects, this water is used as fuel to generate electricity. In contrast, fossil fuels like coal, natural gas, or oil must be extracted from the earth and burned to produce electricity. The term clean is also used because production of electricity with hydropower does not pollute the air, contribute to acid rain or ozone depletion because of carbon dioxide emissions, or (like nuclear power) leave highly toxic waste that is difficult to dispose of.

The current demand and supply gap of 5,000-8,000 MW and demand growing at 8% per annum ensures guaranteed uptake of power produced by IPP projects at market competitive prices.

Liberal and transparent policy for investors to set up IPP projects.

One window facilitation for power projects – PPIB at federal level.

Guaranteed power purchase produced by IPPs, backed by sovereign guarantee of GoP provides a very secure investment climate for investors.
GoP has set up power parks at various locations where the Government will develop the site with water, power-evacuation and access provided. The investors only have to set up power projects at these locations with the entire support infrastructure in place.

Power Parks being set-up at Gaddani (6,600 MW coal potential) and Quaid-e-Azam Solar Park (6,000 MW solar potential).
The hot sandy desert of Thar, houses one of the largest lignite coal reserves in the world. The lignite is dark brown, grayish black or black in colour.

The Hydrocarbon Development Institute of Pakistan, Ministry of Petroleum and Natural Resources, Pakistan's installed capacity of electricity generation is 19,450 Megawatts (MW).

Further, Hydel, Gas, Oil, Nuclear and Coal have a share of 33%, 44.1%, 20.2%, 2.7% and 0.1% of total installed capacity respectively.

The first Investment Policy by Board of Investment (BOI) was given in 1997 which opened services, social, infrastructure and agriculture sectors for foreign and local investors. It was a major step forward for integration of Pakistan’s economy into international markets as prior to this policy; foreign investment was restricted to manufacturing sector only. The 1997 Policy laid a solid foundation for the gains in FDI inflows experienced over the subsequent decade.

Foreign Direct Investment in Pakistan increased by 2761.10 USD Million in 2016. Foreign Direct Investment in Pakistan averaged 2651.26 USD Million from 2010 until 2016, reaching an all time high of 3184.30 USD Million in 2010 and a record low of 2099.10 USD Million in 2012.